On Wednesday, July 24th, the Bank of Canada (BoC) released its latest Monetary Policy Report and announced a rate cut.
The overnight rate was decreased by ¼ percent (25 basis points) to a target of 4.5 percent. This is the second consecutive interest rate announcement that includes a ¼ percent rate reduction. Last month the Bank of Canada was the first Group of Seven central banks to lower rates and has continued its leadership as it awaits similar action elsewhere.
Today’s Bank of Canada announcement included:
The Bank’s preferred measures of core inflation are expected to slow to about 2½% in the second half of 2024 and ease gradually through 2025. The Bank expects CPI inflation to come down below core inflation in the second half of this year, largely because of base year effects on gasoline prices. As those effects wear off, CPI inflation may edge up again before settling around the 2% target next year.
With broad price pressures continuing to ease and inflation expected to move closer to 2%, Governing Council decided to reduce the policy interest rate by a further 25 basis points.
Adjustments to rates paid by consumers and businesses are expected as the Bank of Canada lowers its rates. For every ¼ percent rate cut, a variable-rate mortgagor can expect to pay about $15 less per month for every $100,000 borrowed.
Should inflation continue to follow its predicted path, Tiff Macklem, Bank of Canada Governor, indicated that it would be “reasonable” to expect additional rate cuts.
The next opportunity for the Bank of Canada to adjust interest rates is September 4th. The U.S. Federal Reserve is scheduled to release its next monetary policy and interest rate update on Wednesday, July 31st.
Read more here:
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